Tesco bosses receive bonus boost after Ocado removed from competitor list
Tesco bosses received a bonus boost last year after the grocer removed online supermarket Ocado from a list of competitors.
Tesco chief executive Dave Lewis would have missed out on around £1.6m in shares if the online rival had remained on the list used to compare Tesco’s performance against its competitors.
Before Ocado was removed, Tesco underperformed the list of rivals by 4.2 per cent over three years. However, after the changes were made it outperformed the group by 3.3 per cent.
Lewis, who is set to step down this year, would have lost out on around 979,113 shares if Ocado had not been removed.
Meanwhile, finance director Alan Stewart would have missed out on 534,061 shares. The shares cannot be sold for two years.
Tesco’s remuneration committee decided to remove Ocado from the benchmark in May 2018, saying the company was “pursuing a technology strategy” rather than a retail focus.
“The committee considered the appropriateness of the TSR benchmark in view of significant changes in the retail landscape that were unforeseen when the targets were set,” Tesco said in its annual report.
It added: “Ocado has experienced significant share price growth which analysis shows is directly correlated to the sales of its technology platform as opposed to its food business.
“As a result of Ocado’s divergence from the retail market (and hence as a direct comparator for Tesco), the committee decided to remove Ocado from the TSR comparator group for the 2018 PSP after May 2018.”
The move comes after the supermarket was criticised for awarding a dividend to shareholders while also claiming business rates relief during the coronavirus crisis.
A Tesco spokesperson said: “Our policy is to reward all colleagues responsibly, fairly and competitively against the relevant market pay benchmark for their role.
“The variable element of remuneration has paid out in line with the strong performance of the business last year, as we completed our five-year turnaround journey, delivered significant increases in profitability and cash generation, and built a better business for our customers, colleagues, suppliers and shareholders.”